Fight against corruption in Croatia intensifies

Nevenka Čučković

The fight against corruption remains a top priority of the government, as this area is condition sine qua non if the negotiations with the EU are to be completed by the end of 2010. The government had strived to have some tangible results from its intensified efforts with a hope that the negotiating chapter number 23 on judiciary and fundamental rights would finally be opened at the beginning of June 2010. This chapter remained closed for negotiations until fulfilment of preconditions set by the European Council: a) a full cooperation with the International Criminal Tribunal for the former Yugoslavia (ICTY) in The Hague and b) demonstrated ability of the government to systematically fight against corruption. The stumbling stone for opening this negotiating chapter with the EU had been the inability of the Croatian government to deliver the military artillery logbooks requested by the prosecutor’s office of the ICTY in The Hague, which would serve as evidence that no excessive artillery was used while liberating the Croatian city Knin during the liberating operation “Storm” in 1995, for which some Croatian generals were indicted.
The determination to combat corruption and abuse of position in the highest governing structures has increased since the new Prime Minister Jadranka Kosor took office in July 2009. Since then, Croatia witnessed the arrest, imprisonment and investigation of highly ranked government officials, including the Vice-President of the government, the Minister of the Economy, Labour and Entrepreneurship Damir Polančec, and several top managers of state-owned enterprises such as Hrvatska elektroprivreda (Croatian Electricity Company – HEP), Hrvatske autoceste (Croatian Motorways – HAC), Hrvatska poštanska banka (Croatian Postal Bank – HPB) and Podravka, an internationally reputable food processing company. The government is now racing time to process these cases in front of courts and the situation is additionally aggravated by the fact that the Minster of Justice Ivan Šimonovic will soon leave his position as minister in order to assume an important international function in the UN as Deputy Secretary-General. Šimonović is one of the rare politically independent experts in the present Croatian government, but regrettably will leave this unfinished agenda to his successor, most likely a member of the ruling Croatian Democratic Union (HDZ).[1] To show its strong dedication and determination the government adopted a revised action plan to combat corruption and organised crime in March 2010. Prime Minister Jadranka Kosor declared a “zero tolerance to crime”, while also presenting 145 measures which are to be implemented by all ministries, but especially those which receive substantial government funding as providers of state aid or various incentive schemes – areas traditionally infected by corruption.[2]
Apart from judiciary reform and the fight against corruption and organised crime, shipbuilding and inefficient public administration remain the main problems that have to be solved prior to Croatia’s full membership in the EU as often quoted by European Council documents on Croatia’s progress and also by the Head of the EU Delegation in Croatia, Paul Vandoren.[3] Since the start of the negotiations, all thirty-three negotiation chapters have been opened, of which twenty have been provisionally closed. At the accession conference held in Brussels on 19 April 2010, Croatia was able to provisionally close only chapter 1 on free movement of goods.[4] The last three chapters: Judiciary and Fundamental Rights, Competition Policy and Foreign, Security and Defence Policy were finally open at the accession conference on 30 June 2010.[5]
The government’s Economic Recovery Programme Introduced: yet another hard year ahead
On 19 April 2010, the government finally introduced the long awaited Economic Recovery Programme, an anti-recessionary package of policy measures with an aim to create a push towards faster economic recovery in Croatia.[6] The programme encompasses a mix of long and short term economic and social measures in the areas of fiscal policy, the functioning of public administration, state property management, judiciary reform, social security and the pension system, research and innovation capacities, etc. Many Croatian analysts, both from academic and business circles, would consider the government’s programme a very much delayed and “better late than never” move in the right direction.[7] More critical views were received from opposition party leader Zoran Milanovic (Social Democratic Party – SDP), who argues that the recovery plan is more a list of wishes, “a half elaborated electoral programme”, and that it would be fair for the government to call for new elections and leave implementation to the new government.[8] Academic analysts such as Katarina Ott, Institute of Public Finance, were pointing towards the absence of a strict action plan which would make the programme operational and determine who does what and in what term.[9] She also argued that the programme is inconsistent with other previously introduced measures which focus on providing special financial assistance and loans to distressed enterprises. The initial reactions coming from business and academic circles encouraged the government to come up with an action plan for economic recovery relatively quickly thereafter.[10] The programme did not receive enthusiastic, but rather tight, support from both employers and trade unions in the public sector, as it required further sacrifices in terms of wages. Later on, abolishment of Christmas and holidays’ bonuses and renegotiating the terms of collective agreements for workers in the public sector become an issue of open conflict of the trade unions with the Government. [11] But they welcomed the government decision to block further erosion of purchasing power of the lower-income population, which brought abolishment of the “crisis tax” introduced in July 2009, whose effects were in essence pro-recessionary and further strangulated the economy. Governor Rohatinski welcomed the adoption of the Recovery Programme, as it takes seriously the need for significantly reducing the fiscal deficit and balance of payment deficit, which would, as a result stimulate exports, rationalise domestic consumption and increase savings – issues he often reiterated as a way out of the crisis.[12] As opposed to most Central and Eastern European countries, Croatia has not yet reached the turning point out of the recession and it seems that the recovery will be very slow and protracted. As the new European Bank for Reconstruction and Development (EBRD) data show, in 2010, the Central and Eastern Europe (CEE) countries would grow on average around 3.7 percent while Croatia could expect only a 0.3 percent growth rate.[13] The Institute of Economics Zagreb data on the first quarter of 2010 also indicate that the turning point has not yet been reached, that growth in this year could still be negative, and that visible recovery of Gross Domestic Product (GDP) is expected only in 2011.[14] There are only weak signs of recovery in industrial production and exports in the first quarter of 2010, while construction activity, which has been an engine of growth in the past years, further dives and retail trade stagnates.[15] In short, yet another bleak year is ahead.

President Josipovic’s diplomatic offensive to improve relations with neighbours

 In January 2010, Ivo Josipovic, a candidate from the Social Democratic Party (SDP), was elected new Croatian President, winning 60.3 percent of the votes. He succeeded Stjepan Mesic after 10 years as President of Croatia. Since he took office in February 2010, President Ivo Josipovic intensified foreign policy efforts towards improving relations with neighbouring countries in the Western Balkans, especially with Bosnia and Herzegovina and Serbia. Apart from meeting Serbian president Boris Tadić in March, which was also intensively covered by the media, Ivo Josipovic received a great deal of attention from the international and domestic political elite, the media and the general public with his speech delivered in Ahmici, Bosnia and Herzegovina, which paid tribute to war victims,[16] and his address to the parliamentary assembly in Sarajevo.[17] He apologised for the Croatian politics led by former President Franjo Tudjman during the 1990s, which might have contributed to the conflicts and sufferings in Bosnia and Herzegovina during the 1990s. His speech steered a lot of public and political debate in Croatia as Ivo Josipovic’ apologies were not received well by the HDZ hard-liners, but also some of its top government figures. Initially, it was also received with unease by the Prime Minister Jadranka Kosor, but later on they managed to “agree to disagree” on the matter. On the other hand, the President’s speech was very much welcomed by the main international actors and partners such as the EU and USA and is considered by most academic analysts and the media as a good basis for a qualitative shift of political focus from the past to the future.

President Josipovic’s additional step in the initiative to strengthen trust and improve relations with neighbours in the region was by visiting Republika Srpska in Bosnia and Herzegovina and meeting with Prime Minister Milorad Dodik in Derventa at the end of May 2010.[18] They especially talked about open issues, such as the return of Croatian refugees to their homes in Republika Srpska.

[1] Jelena Lovric: Bad timing for departure of a good minister, Jutranji list, 6 May 2010, p. 23. In this text the author argues that this is a hard blow on Kosor’s team and that Simonovic skills and expert authority would be very much missed. Also his most likely successor Dražen Bošnjaković is a HDZ party member and his independence would be doubtful.

[2] Governement of Republic of Croatia: Government approved Revised Action Plan to Combat Corruption, 18 March 2010, available at: (last access: 17 May 2010).

[3] Shipbuilding, Judiciary and Public Administration, interview with Paul Vandoren, available at: (last access: 12 May 2010).

[4] See the statement at the Delegation of the EU to the Republic of Croatia, available at: (last access: 14 May 2010).

[5] Kosor: Croatia in the last 500 meters of the EU marathon,, 30 June 2010, available at: (last access: 5 July 2010).

[6] Government of Republic of Croatia: Economic Recovery Programme, April 2010, available at: (last access: 17 May 2010).

[7] Damir Kustrak, President of the Croatian Employers Association: Interview, 101 Radio, 17 May 2010, 9. a.m.

[8] SDP describes economic recovery programme as wish list, 26 April 2010, available at: (last access: 17 May 2010).

[9] Katarina Ott, Director of Institute of Public Finance: Which government should we trust? (in Croatian), available at: (last access: 17 May 2010). In this comment she criticised not only the absence of an action plan, but also inconsistency of some economic measures.

[10] Economic Recovery Programme Operational Plan, available at: (last access: 17 May 2010).

[11] The Unions strongly opposed to proposed changes in Labour Law which would enable an end and renegotiation of the present Collective agreement for workers in the public sector. They organised a written support of over 800,000 Croatian citizens calling for a referendum on the Law. See: Croatian Trade Union Association, Kosor said “no”: referendum follows! available at: (last access: 6 July 2010).

[12] Željko Rohatinski: Additional liquidity yes, but only to production, 6 January 2010, available at:,-ali-samo-u-proizvodnju,65193.html (last access: 19 May 2010).

[13] Etic Berglof Chief economist: EBRD forecasts for transition countries, presented by at the EBRD Annual Meeting in Zagreb 14-15 May 2010, available at: (last access: 17 May 2010). See also the interview with Peter Sanfey: EBRD lead economist for SEE and Croatia, Jutarnji list, 15 May 2010, pp. 6-7.

[14] Economic Institute Zagreb: Croatian Economic Outlook Quarterly no. 42, available at: (last access: 17 May 2010).

[15] Ibid., p. 2.

[16] For details, see the Statement of President Josipovic, available at: (last access: 14 May 2010).

[17] Address of President Josipovic at the Parliamentary Assembly of Bosnia and Herzegovina in Sarajevo, available at: (last access: 14 May 2010).

[18] Statement of the Office of the President of Republic of Croatia, available at (last access: 2 July 2010).